All is fair in... disciplinary procedures?

No employer (or at least no decent one!) relishes the prospect of having to take an employee through a disciplinary process, particularly where the potential outcome is going to be dismissal. In addition to having to manage what can be a challenging and emotive process, disciplining an employee or terminating their employment can carry legal risks in terms of any decision being challenged by the employee through their bringing a claim before the Employment Tribunal.

In cases of dismissal, the most obvious risk to an employer is that of an employee bringing a statutory claim of unfair dismissal. Where such a claim is raised, an employment tribunal will require:

• the employer to show dismissal was for a potentially fair reason (conduct; capability; redundancy; statutory ban; or some other substantial reason);
• to establish that the employer has met the requirements of procedural fairness; and
• to decide whether the decision to dismiss is one which falls within the “range of reasonable responses” open to the employer based on its size and resources.

In cases of misconduct, tribunals will normally find that a decision to dismiss will fall within the range of reasonable responses if an employer can show it had reasonable grounds to suspect misconduct had occurred; that it carried out as much investigation into that suspicion as was reasonable; and based on that investigation it was reasonable to believe misconduct had occurred. If an employer can satisfy a tribunal on this, and show it had followed the procedural steps required of the ACAS Code on Discipline & Grievance (and the principles of the employer’s own internal disciplinary procedure), then the risk of a successful claim being brought by the aggrieved employee would be minimised, if not removed completely.

However, a recent case suggests that there may be further risks to an employer when dismissing an employee which arise out of the terms of the employee’s contract of employment.

Questions of fairness

In Burn v Alder Hey Children’s NHS Foundation Trust [2021] EWCA Civ 1791, the Court of Appeal has suggested that an employee’s contract is subject to the implied term that any disciplinary process will be conducted fairly. While not going so far as to state that this is definitively the law at present (as it was not a live matter in the case before them), two judges expressed the view that they would be open to finding such a term exists.

At first blush this may not seem to be too much of a concern for employers. However, if the courts do develop the law to find such a term does exist, it does create a new risk for employers. While the law as stated above would apply to any statutory claim of unfair dismissal, where a dismissed employee maintains that the employer has conducted a disciplinary process unfairly, they could argue that there was an inherent unfairness in the process which amounts to a breach of contract, and where that leads to a wrongful dismissal that they should be entitled to recover damages for the loss (salary and other financial losses flowing from the unfair termination of employment) their subsequent dismissal results in.

A good example of where such a situation could arise can be found in the case of Orr v Milton Keynes Council [2011] EWCA Civ 62. In this case Orr had been dismissed for (in addition to another matter) being rude and aggressive during a discussion about working hours with his manager, Madden. When his claim was heard by the tribunal, a finding of fact was made that the reason Orr had been rude and aggressive to Madden was that Madden had attempted to reduce Orr’s hours without his agreement. Upset by this, Orr had begun to use Jamaican patois, to which Madden had responded by saying, “You lot are always mumbling… I can’t understand a word you lot are saying”. This run of events was not disclosed by Madden during the Council’s investigation, meaning he chose to deliberately conceal what he had said. Orr’s unfair dismissal claim was not upheld on the basis that the tribunal accepted the council had carried out a reasonable investigation and the dismissing officer was unaware of the exchange between Orr and Madden.

Would Orr have had a better chance of success if he could have argued that the failure of the Council to get a full account of matters from Madden as part of its internal investigation meant the disciplinary process was not conducted fairly? There must be that possibility. Could it be fair that an employee of the council failed to provide material evidence that might have led to a different view on whether an act of misconduct had taken place? Could it be fair that Orr was dismissed on the basis of an allegation which arose from a situation where he was verbally racially harassed?

Potential burden

As with a lot of employment law, the devil is in the detail and how particular words and terms are defined and interpreted. However, if the courts do proceed to find that such an implied term does exist, the burden on employers in ensuring their disciplinary process is conducted to the required standard will increase.

One particular situation where the introduction of such an implied term would have immediate consequences would be where an employee with less than two years’ service is being dismissed. As only employees who have in excess of two years’ employment have the right to bring the statutory claim of unfair dismissal, those who are shy of that period would usually be unable to legally challenge the decision to dismiss them. The introduction of a separate contractual right would change that position and open the door to all employees, regardless of length of service, bringing a claim where they believed the decision to dismiss them on grounds of misconduct was unfair.

So, what should employers do? As noted above, the comments made in the Burn case do not amount to law at present. However, unfortunately, the way of these things is such that even if the law is unclear at present this would not stop a tribunal or court retrospectively applying such a term when determining a claim which is before it. As such, employers (disciplinary officers and HR advisers) should try and ensure that before confirming any decision following a disciplinary procedure, they carry out a final review to try and ensure the disciplinary process has been conducted fairly. This could involve compiling a checklist, which would include points such as: have all witnesses been spoken to; have the explanations provided by the employee been investigated in full and put to other witnesses; is there any other obvious evidence which is available which has not been considered?

One potential silver lining for employers should the law develop in this way comes from the case of Johnson v Unisys Ltd [2001] UKHL 13. There the House of Lords (as it then was) stated that the extent to which damages can be awarded for pre-dismissal breaches of a contractual disciplinary procedure would be restricted to losses incurred during the period it would have taken the employer to follow the disciplinary process. This decision was taken to prevent there being a duplication of the statutory right to claim compensation for being unfairly dismissed.

Bill Gates once said: “Life is not fair; get used to it.” What is clear at present is the uncertainty arising from the Burn judgment makes it more difficult for employers to ensure their disciplinary procedures are carried out to the required standard. We can only hope that this is one unfairness that is resolved quickly.